Harlan T. Beverly writes from Austin, Texas about Entrepreneurship, Marketing and Business for Engineers and Other Logical Thinkers.

Saturday, November 9, 2013

Business Use of Patents and Provisional Patents

The raging debate about Patent Trolls and what can and should be patented might lead one to consider, what is the business purpose of a patent? Particularly if you are a startup (very early stage, perhaps pre-funded) with little cash, little time, and a need for focus, the question of patents, to patent or not, seems to be somewhat common. This post is a summary of my advice and knowledge on the topic, as I recently provided to a new company called Basedrive who are working on their business plan as part of The University of Texas Longhorn Startup class and program.

Here is my advice...

1. First, don't be a Patent Troll:

A Patent Troll is someone who patents something with no real intention of building it, so that later they can 'claim royalties' or sue big companies for 'stealing their idea'. This approach is not something upon which to build a true entrepreneurial business; and such loopholes should be looked on with great skepticism.

2. Don't do patent searches...

If you are thinking of writing a patent, and are worried if your patent is truly novel or not, you may be tempted to 'search prior patents'. DO NOT DO THIS! You will be required to list all the patents you looked at, and this could taint you or your ideas... further, you WILL likely find something similar.. but it's not your job to know this, or if yours is "different enough".

IF YOU THINK IT MIGHT BE UNIQUE, do not search... just move to step 3, below.

3. Decide if $130 (or so) is worth spending or not...
For $130, all in total amount, you can file a provisional patent. (See Patent Fee Schedule)

So, what would a $130 Provisional Patent buy you for your business?
a.) You can put the words "Patent Pending" on your product.
b.) Investors will see you as 'better' than companies without a patent pending.
c.) It can lead to a real patent in the future, with a priority date equal to the date you submitted the patent (or earlier).

The downside? None. In order to claim the priority date by means of your provisional patent, you need to file the final patent within 12-months of submitting the provisional; but this is not a bad thing... even if you don't write the final patent in the 12-months, you can still write the final patent later with no penalty. (just no claim on the provisional).

If you need to buy food, don't spend the $130... but otherwise, I say do it.. at least for 1 thing!

4. What is Patent-able/What to write?
So, what do you patent? My best advice is to focus on some implementation detail that you do that helps your product/service be unique. Got no technology? Don't bother writing a Patent (IMHO).

What kind of technology? Hardware? Yes. Software? Yes. Both? Ideal!

Even if your use of the technology is in software, I suggest writing the patent as though the software could be implemented "into a device"... (thus covering both hardware and software). This might require creative thinking, but it might also get you the patent later!

What do you write for a provisional? SIMPLE: Just write in plain English how your technology works, and how it might work in software or hardware. Simple, plain, English.

You will also need 1 drawing. 1. not 2. 1. Simple block diagram is ideal, showing the system.

Now, go to uspto.gov and SUBMIT IT YOURSELF! No need to pay a lawyer to submit or review a provisional patent. JUST DO IT!

5. Should you file a final, full patent?

Maybe. But not yet. Not until either: a.) you can easily afford the $8,000-10,000 for a lawyer to do it right... or b.) your business really needs it for some reason [e.g. to increase your stock's value even more by having full issued patents ].

When you do a final patent... simply get a lawyer to do it. Simple. A real patent lawyer. You don't want to do a final by yourself. Just give the lawyer your provisional as a starting place, and off you go!

6. So business value?
Yep. Provisional = Obvious. It'll help you stand out and raise money and look good. (that's it really).
Final full patents... = Less Obvious. It MIGHT help you raise more money at a better price, it MIGHT protect you from getting sued [because you could counter-sue], it MIGHT help you go after someone who is infringing on your patent (doubtful)...

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About Me

In 2005, Harlan founded and was CEO of Bigfoot Networks, Inc., a gaming
hardware company, which was acquired by Qualcomm in 2011. After Bigfoot,
Harlan founded and was CEO of Karmaback, Inc., a very successful Social
Networking SaaS company, which was acquired in 2013. Harlan then worked for Creeris Ventures as a virtual VP of Marketing for
their 9 portfolio companies. Harlan is currently CEO of Key Ingredient, a high-tech Cloud technology company, focused on delivering Food Recipes via the Cloud. Harlan also recently completed his PhD in
Business and regularly lectures at U.T. Austin on Business, and is
passionate about the convergence of hard science with Business.

Before becoming an entrepreneur, Harlan worked at Intel and was
responsible for architecture and development of corporate server
networking products, including the world's first 10-Gigabit Ethernet
adapter. He later joined start-up Britestream Networks and helped
develop a 100% CPU off-load SSL security solution. Harlan has over 12
patents from his engineering career, has been published in dozens of
books and articles.

In his 12 years leading companies and teams, Harlan has successfully
launched 5 hardware and 15 software products including the Killer NIC,
2007 Network Product of the Year (CPU Magazine). Harlan has also raised
over $20MM in venture financing in the challenging intersection of
entertainment and technology.